Here’s what Musk stands to lose from the US government

Elon Musk’s messy public breakup with President Trump appears to be causing damage to both men’s fortunes, but Musk has more to lose thanks to his companies’ many entanglements with the US government.

Trump has shown that he’s willing to turn the mighty power of the US government against his enemies to settle personal beefs, including law firms, individual cybersecurity experts, and the paper straw industry. Let’s take a look at what Musk and his businesses face to lose if the rift worsens.

SpaceX

SpaceX receives a huge amount of money from the US government. In February, Reuters reported that SpaceX CEO Gwynne Shotwell said the company has about $22 billion in government contracts. Sherwood News’ reporting found that between contracts for launching military satellites for the Department of Defense and ferrying astronauts and supplies to the International Space Station for NASA, the US government had paid SpaceX over $18.5 billion through September 2024.

The government is also a big customer for SpaceX’s Starlink satellite service. The Department of Defense signed a contract for Starlink terminals, which it supplied to Ukrainian forces to defend itself from the Russian troops.

Musk’s long-term goal is to get humans to Mars to make humans an multi-planetary species. SpaceX’s Starship is essential to making that sci-fi dream come true (if they can keep the gleaming rockets from exploding). Musk’s plans involve increasing the frequency of Starship flights from the newly minted town of Starbase, Texas.

The spectacular failures of the rockets have affected US commercial airspace, and the Federal Aviation Administration has the authority to approve or cancel these launches.

Tesla

One of Tesla’s key risks stems from the crucial role that federal regulation plays in the company’s immediate plans: self-driving cars. Musk is betting the business on the yet to be released Cybercab, which could be derailed if the National Highway Traffic Safety Administration decides to take action following alarming videos of fatal crashes using Tesla’s long-promised “full self-driving mode.”

One of the biggest consumer incentives driving EV sales is the $7,500 rebate available for new EV vehicles. (It’s up to $4,000 for used EVs.) If the Trump administration succeeds in killing these Biden incentives in their “big, beautiful bill,” that would amount to a significant price hike for Teslas at a time when its US sales are down 5%, while EV sales overall are up 17%.

That legislation, which is currently being negotiated in Congress, also includes a provision that charges EV drivers an annual $250 fee for contributions to the Highway Trust Fund, which gas-powered car drivers pay into via gas taxes (though gas car drivers pay far less than that annually).

Tesla’s business is also propped up by regulatory tax credits, which accounted for $595 million last quarter. The credits are sold to automakers that aren’t meeting emissions regulations. If you take away those credits sales, Tesla’s last quarterly profit would have turned into a loss.

While not directly under Trump’s control, state governments also have a lot of say over the tax breaks that Musk’s businesses get, like the $1.3 billion worth of incentives that Nevada offered Tesla for its Nevada Gigafactory.

Investors seem to realize what Tesla could lose as a result of this beef, evidenced by yesterday’s historic drop in Tesla’s stock, wiping out $152 billion in a matter of hours.

xAI and X

There are a lot of X’s flying around here. xAI is Musk’s AI business that created the Grok LLM forged in the heart of the Colossus supercluster’s 100,000 Nvidia GPUs.

A few months ago, xAI bought X, the social media network formerly known as Twitter. That massive data center near South Memphis, Tennessee, has been spewing methane emissions into the air via unlicensed gas turbines needed to boost the power for the data center, watchdog reports have found.

Federal agencies could give Musk some headaches here, if they suddenly decided clean air was a priority.

Neuralink

When your business is installing hardware in people’s brains, government regulation could make or break you. One call to the Food and Drug Administration and Trump could kill human trials for Neuralink implants currently underway, which are regulated by the agency.

Tariffs touch everything

From the microprocessors in Tesla’s cars to the steel shell of the Starship, all of Musk’s businesses are affected by tariffs on imported materials. The whipsaw back-and-forth on tariffs could continue to cause problems for Musk’s companies. If Trump were to reach for one of his favorite tools to cause pain for Musk, he could target crucial components that Tesla, SpaceX, or xAI needs to grow.